Thursday, February 16, 2017

Moving to Mexico

No, it’s not me; I am talking about jobs moving to Mexico because for some companies, the U.S. has become too expensive and too much regulation to give much profit to the companies who are fleeing there to get a break on their costs. I mean despite the efforts by the new U.S. Administration to impose a border tax on goods coming into the U.S. from Mexico and appealing for the companies to stay in the U.S., the march of the companies goes south. Even if some of the companies are choosing to have production stay in the U.S., most of the companies are confidently moving their production line to Mexico even under this climate of Nationalism and trade protection. Why that is the production keeps on moving to the south. The answer is simple, economics. If nobody has guessed that by now, they should take classes again in economics if they have not already done so.
Why would anybody want to move their production to Mexico when you have far more productive people willing to work in the U.S. although more expensively. Simple case of economics as the regulatory environment is very lax and also the cost of labor is only four dollars a day as compared to 7.25 per hour in the U.S. so even if the productivity level of the Mexican workers is less than the U.S. the cost to acquire and train them to do the same job as is being done in the U.S. outweighs the higher cost in the U.S. How would you be able to beat that unless you are in very economically depressed part of the U.S. and your job is highly automated enough to lower the cost advantage.